Life Ratings and Trust in Institutions in South America

by Lucia Macchia and Anke C. Plagnol

People's life circumstances matter to their subjective well-being: Healthier, more educated, married and employed people report, on average, higher life satisfaction. However, circumstances that are unrelated to people's personal lives can also affect their quality of life. For instance, a number of macroeconomic conditions are associated with individual subjective well-being (i.e., current and future life evaluations). On average, people who live in countries with higher GDP per capita, lower unemployment and inflation rates, higher social protection spending and quality governmental institutions report higher life satisfaction. Yet, these (objective) macroeconomic indicators may not always reflect people's (subjective) perceptions of the national institutions in their respective country.

Does people's confidence in government-regulated institutions factor into their life satisfaction? Using data from the Gallup World Poll collected between 2009 and 2016 in 10 South American countries (Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Paraguay, Peru, Uruguay and Venezuela), we found that people who express confidence in six national institutions -- namely financial institutions, the military, the judicial system, the honesty of elections, the national government and the police -- report higher current (today) and expected (five years from now) life satisfaction (see following table).

Ordinary Least Squares Regressions for Present and Future Life Satisfaction in 10 South American Countries

Life satisfaction - Present

Life satisfaction - Future

Confidence in financial institutions - Yes

0.168***

0.225***

-0.021

-0.021

Confidence in the honesty of elections - Yes

0.144***

0.109***

-0.023

-0.024

Confidence in the military - Yes

0.069***

0.053**

-0.021

-0.022

Confidence in the judicial system - Yes

0.080***

0.035

-0.025

-0.025

Confidence in the national government - Yes

0.128***

0.201***

-0.023

-0.024

Confidence in the police - Yes

0.202***

0.110***

-0.020

-0.021

Individual characteristics

Yes

Yes

Macroeconomic indicators

Yes

Yes

Country fixed effects

Included

Included

Year fixed effects

Included

Included

Constant

4.094

-0.104

-2.815

-2.937

Observations

55,107

51,458

Adjusted R (2)

0.117

0.172

Note: *p<0.1; **p<0.05; ***p<0.01. Life satisfaction both present and future are evaluated in a scale from 0 to 10; a higher number denotes higher life satisfaction.

GALLUP World Poll, 2009-2016

The study of confidence in national institutions, and its potential relationship with subjective well-being, deserves special attention in a region such as South America, where citizens' perceptions of government services likely remain fluid because of past and ongoing economic and political upheaval.

South America has witnessed turbulent economic and political developments over the past five decades. During the 1970s, a number of democratically elected governments were overthrown by military governments in violent coups that demonstrated little respect for human rights. Repeated economic crises increased already high levels of poverty and income inequality, which were exacerbated by high unemployment and inflation rates.

In almost all of the countries included in our analysis, the majority of respondents lack confidence in most of the institutions under study (see second table). The sole exception is Uruguay, where respondents rate their confidence positively in all six categories.

Percentage of people who report confidence (or no confidence) in national institutions in 10 South American countries, 2009-2016

Financial institutions

The military

The judicial system

The honesty of elections

The national government

The police

%

%

%

%

%

%

Argentina

No

55*

58*

67*

58*

58*

49^

Yes

45*

42*

33*

42*

42*

51^

Bolivia

No

43^

67*

76*

64*

54*

72*

Yes

57^

33*

24*

36*

46*

28*

Brazil

No

53*

50

57*

77*

59*

53*

Yes

47*

50

43*

23*

41*

47*

Chile

No

71*

42^

77*

58*

60*

33^

Yes

29*

58^

23*

42*

40*

67^

Colombia

No

54*

69*

69*

76*

60*

44^

Yes

46*

31*

31*

24*

40*

56^

Ecuador

No

52*

34^

64*

59*

42^

42^

Yes

48*

66^

36*

41*

58^

58^

Paraguay

No

41^

45^

75*

71*

64*

50

Yes

59^

55^

25*

29*

36*

50

Peru

No

59*

65*

83*

70*

76*

66*

Yes

41*

35*

17*

30*

24*

34*

Uruguay

No

32^

39^

44^

20^

37^

34^

Yes

68^

61^

56^

80^

63^

66^

Venezuela

No

40^

59*

62*

58*

58*

68*

Yes

60^

41*

38*

42*

42*

32*

Note: The * in Argentina and financial institutions represent that, in Argentina, more people reported not to trust the financial institutions. In contrast, the ^ in Bolivia and financial institutions represent that, in Bolivia, more people reported to trust the financial institutions. The same criteria are applied to other countries and national institutions.

Gallup World Poll

The general lack of trust in national institutions and its association with current and expected life satisfaction should encourage South American governments to work toward building confidence in the institutions they regulate.

However, our analysis is correlational and we cannot rule out that higher life satisfaction may be responsible for people's confidence in national institutions, and not vice versa. This is the main limitation of our study. It is possible that people who are more satisfied with their lives, and who are maybe more optimistic in general, tend to rate the quality of institutions more highly than people who are less satisfied with their lives. However, our results hold after taking people's personal circumstances and their country's macroeconomic conditions into account.

Overall, our results suggest that national institutions that merit trust may be a further determinant of citizens' subjective well-being. The positive association between confidence in national institutions and current and expected life satisfaction highlights the need for governments to invest in well-functioning institutions.